"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Thursday, January 6, 2011

Fortnightly Roundup of SSRN Articles on Arbitration (December 16 - 31, 2010)

Consent of the Holder of the Bill of Lading to the Arbitration Clause by Reference
Nader M. Ibrahim
Abstract:
According to the author, the coming into force of the 1978 Hamburg Rules (November 1, 1992) in its contracting countries (the same will apply to the 2008 Rotterdam Rules) requires from the courts of these countries to revisit its case-law on the matter of incorporation of arbitration clauses into bills of lading, this particularly applies to Egypt. Two aspects should be changed; first, courts will no longer need to use conflict of laws to determine applicable law to the issue of the consent of the holder of the bill of lading with regard incorporation, since the Rules establishes an international rule directly applicable (i.e., international material rule); and second, the courts should check consent of the holder of the bill of lading, and not that of the consignee who made the original contractual relationship (usually a charterparty). Though there is no unified interpretation of the 1978 Hamburg Rules (and 2008 Rotterdam Rules) with regard the criterion of consent for the incorporation of arbitration into the bill of lading (Article 22(2) of the HgR; Article 76(2)(b) of the RR), the author interprets the Rules in favour of arbitration. According to him, it suffices that the holder of the bill of lading accepts the incorporation expressly or tacitly; however the author does not extend support to arbitration by denying jurisdiction to the courts to examine the consent in application of the ‘comp├ętence de la comp├ętence’ principle (opposite to the French Pella/Lindos case-law, 2005-2006). Substantively, he supports the application of the English case-law and which distinguishes between specific and general references in determining such const (to the contrary to French case-law, namely the 1994 Osprey Stolt case). For the author, his lenient interpretation is supported by the procedural and substantive constrains invented by the 1978 Hamburg Rules (and later adopted by the 2008 Rotterdam Rules) and which protect the cargo interests’ shifting the arbitration clause from their risky foe to their best friend.

A Practical Approach to Affording Review of Commercial Arbitration Awards: Using and Appellate Arbitrator
Paul Bennett Marrow
Abstract:
Arbitration awards are supposed to be final. But that finality is sometimes more of a curse than a benefit because it drives parties away from the arbitration process. In this article I discuss ways to address this concern within the arbitration clause itself. I argue that under the commercial rules of the American Arbitration Association it is possible to craft a clause that permits an appeal on issues of law to a panel composed of arbitrators and I offer a series of practical suggestions. I also discuss the idea within the rules of CPR and JAMS. The article also includes a discussion of the impact of the recent U.S. Supreme Court decision in Hall v. Matell, 552 U.S. 576 (2008) on the ability of parties to an arbitration clause to include provisions for review by an appellate arbitrator.

Compulsory Arbitration Changes Proposed: Time to Comment
Roselle Wissler and Bob Dauber
Abstract:
This article reports the findings of an empirical study of arbitration in Arizona's general jurisdiction civil trial courts. The study found that the arbitration program's primary goals of providing faster and less expensive resolution of cases, reducing the court's workload, and maintaining or enhancing the satisfaction of users, were not entirely being met. Many cases did not meet arbitration deadlines and court case processing time standards. Most cases eligible for arbitration concluded before a hearing was held, and those cases that had a hearing seemed more likely to have been diverted from settlement than from trial. Consequently, the arbitration program was likely to affect the court's workload in a relatively small proportion of cases, was more likely to reduce the use of court pretrial rather than trial resources, and was unlikely to substantially reduce litigants' costs. But arbitration did increase access to a hearing on the merits. Lawyers who represented clients in arbitration had generally favorable assessments of the process and award, but expressed concerns about the adequacy of arbitrators’ knowledge of both substantive issues and arbitration procedures. A majority of lawyers favored retaining compulsory arbitration and some of its basic components but changing policies relating to arbitrator service and assignment. These findings, which were consistent with studies in other jurisdictions, suggest that court-connected arbitration does not have negative consequences, but also does not consistently or substantially improve the effectiveness and efficiency of dispute resolution.

The Backlash Against Investment Arbitration: Perceptions and Reality
Michael Waibel , Asha Kaushal , Kwo-Hwa Chung and Claire Balchin
Abstract:
Commentators increasingly question whether a backlash against the foreign investment regime is underway. This book, the outgrowth of a conference organized by the editors at Harvard Law School on April 19, 2008, aims to uncover the drivers behind the backlash against the current international investment regime. A diverse set of contributors reflect on the current state and the future direction of the international investment regime, and offer some tentative solutions for improvement: academics, practitioners, government officials and civil society.

Contributors assess whether the current regime of investment arbitration is in crisis. They take a step back to look at the long-term prospects of investment arbitration, including reforms that could bring substantial improvements to the investment arbitration process. These questions can no longer be ignored or be dismissed as esoteric criticisms by fringe groups or outsiders with no stake in the system. Without appropriate remedial action, the rising discontent over the perceived and actual problems of the international investment regime risks undermining the tremendous gains in the rule of law on cross-border investment flows achieved over the last decades. Unless acknowledged and addressed, these concerns could throw the baby out with the bathwater.

Enjoining Employers Pending Arbitration: Some Misconceptions and Clarifications
William P. Kratzke
Abstract:
Labor organizations increasingly sue in federal courts to obtain an injunction enjoining an employer from pursuing a contemplated course of action pending arbitration. This Article will demonstrate that the Norris-LaGuardia Act is inapplicable in this context, which leads to the conclusion that a "Boys Markets" injunction against an employer simply is not possible. When a union seeks to have contemplated employer conduct enjoined pending arbitration, the action should not be governed by the principles of the Norris-LaGuardia Act, Boys Markets, or Buffalo Forge. Rather, an employer should be enjoined from pursuing a contemplated course of action when its conduct interferes with the preservation and advancement of a strong, underlying policy of labor relations law - namely, the maintenance of the central role played by the arbitration process. Injunctive relief should minimize the risk of erroneous, irreparable injury as well as provide the final judicial solution to the arbitrable dispute. This premise does not mean that the employer must always be thwarted in its efforts to make changes. It does mean, however, that the employer should bear the risk that arbitration as a process will be undermined. If the employer cannot bear this risk and its cost, it should be enjoined.

Foreign Investment In and Out of Japan: Economic Backdrop, Domestic Law, and International Treaty-Based Investor-State Dispute Resolution
Shotaro Hamamoto and Luke R. Nottage
Abstract:
This paper provides the first-ever detailed analysis of the dispute resolution provisions contained in Japan’s burgeoning international investment treaties (BITs and FTAs or EPAs). That development is also located in the context of Japan’s inbound and outbound flows in foreign investment and the background domestic law limiting or protecting foreign investment, as well as an overview of the process by which the Japanese government negotiates these treaties. The paper concludes that the considerable diversity in treaty provisions (especially regarding investor-state arbitration or ISA) increases transaction costs for governments and investors, but leaves scope to develop some innovative provisions (eg on Arb-Med or transparency of proceedings) at a time of considerable debate over the pros and cons of ISA.

Our related paper focuses on the substantive provisions of Japan's investment treaties: forthcoming in Chester Brown and Devashish Krishan (eds) Commentaries on International Investment Agreements (OUP, 2011).

National Reports: Serbia
Vladimir Pavic
Abstract:
This paper represents an overview of Serbian regulatory environment in matters of arbitration, in particular the way in which UNCITRAL Model Law has been implemented.

Court-Connected General Civil ADR Programs: Aiming for Institutionalization, Efficient Resolution and the Experience of Justice
Barbara McAdoo and Nancy Welsh
Abstract:
State and federal courts in the U.S. have institutionalized various ADR procedures to resolve general civil (non-family) matters, such as personal injury disputes, contract claims, lawsuits arising out of alleged discrimination or violation of civil rights, etc. This chapter reports the results of interviews with the directors of leading court programs regarding their structural choices in offering mediation and non-binding arbitration. In addition, the chapter considers the implications of available empirical research regarding factors that appear to maximize: the use of court-connected civil ADR programs, the achievement of settlements in such programs, and their provision of fair and just processes. Specifically, the chapter provides guidance regarding: reasons for institutionalizing ADR; who should be involved in the design and implementation of a court’s ADR program; the types of ADR that are suitable for general civil cases; how to promote good program management; how to initiate a program; whether participation should be mandatory or voluntary; statutes, rules and forms that may be drafted; education of judges, court staff, attorneys and others; selecting cases for ADR; different referral systems; the timing of referrals to ADR; who should serve as neutrals; appropriate qualifications and training for neutrals; support and evaluation of neutrals; the roles to be played by parties and their attorneys; ethical rules for parties, judges, and neutrals; planning for the assessment of ADR programs’ effectiveness; procedures for hearing and resolving complaints; and funding a court-connected ADR program.

The Place of Court-Connected Mediation in a Democratic Justice System
Nancy Welsh
Abstract:
A justice system, and the processes located within it, ought to deliver justice. That seems simple enough. But, of course, delivering justice is never so simple. Justice and the systems that serve it are the creatures of context.

This Article considers mediation as just one innovation within the much larger evolution of the judicial system of the United States. First, this Article outlines how the values of democratic governance undergird our traditional picture of the American justice system, presumably because the invocation of such values helps the system to deliver something that will be respected by the nation’s citizens as “justice.” The Article then highlights aspects of the changing picture of the American civil justice system – i.e., legislative delegation and judicial deference to adjudication by administrative agencies; the judicial embrace of and deference to decision-making by arbitrators; the marginalization of the jury in civil litigation – to suggest that today’s sprawling and multi-tiered structure is increasingly disengaged from its democratic roots. Finally, the Article examines the place of court-connected mediation in this evolution to determine whether it is part of the reinvigoration or further erosion of a democratic justice system.

Ultimately, the Article makes three recommendations: 1) mediation advocates need to help courts overcome their current funding and staffing difficulties and regain an appropriate measure of self-respect for their unique role in enabling a democratic people to govern themselves; 2) courts should end their reliance on mandatory mediation or at least provide that the authority to mandate mediation should sunset after an appropriate period; and 3) courts should understand mediators as their agents – and provide for meaningful oversight that assures just resolution.

Sovereign Defaults Before International Courts and Tribunals
Michael Waibel
Abstract:
As public debt soars, a new wave of sovereign defaults looms. International law on sovereign defaults is underdeveloped because States have largely refrained from adjudicating disputes arising out of public debt. The looming new wave of sovereign defaults is likely to shift dispute resolution away from national courts to international tribunals and transform the current regime for restructuring sovereign debt.

The history of adjudicating sovereign defaults internationally over the last 150 years shows how international tribunals balance creditor claims and sovereign capacity to pay across time. It offers a rich repository of experience for future cases: US state defaults, quasi-receiverships in the Dominican Republic and Ottoman Empire, the Venezuela Preferential Case, the Soviet repudiation in 1917, the League of Nations, the World War Foreign Debt Commission, Germany's 30-year restructuring after 1918 and ICSID arbitration on Argentina's default in 2001. The remarkable continuity in international practice and jurisprudence suggests avenues for building durable institutions capable of resolving future sovereign defaults.

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